Question

When shares are forfeited, share capital account is debited by __________.

• A. paid up amount of shares
• B. called up amount of shares
• C. face value of shares
• D. uncalled capital

Answer 1

The correct option is B called up amount of shares

When the shares are forfeited, all accounting entries which were passed at the time of issue must be reversed.

Hence while forfeited, share capital account should be debited by the amount called up on shares.